Episode #6: Middle Management Madness

Leadership is critical in business and the ability of companies to keep tapping their talent to make sure they always have the most competent leaders is a crucial task. The system actually worked in Japan up until the late 1990s, but it is not working now. The education of leaders in Japan is now way behind compared to the West. Companies can’t dither around any longer. Japan has to really fix this issue and has to do it now.

Before we get into this week’s topic, here is what caught my attention lately.

Japan is facing the impending demographic crunch by investing in robots, software and automation. Goldman Sach’s economists are predicting that if investment doesn’t rise in response to the labour shortage, Japan will have persistent zero growth from 2030 onward. Bank of America Merrill Lynch has forecast that IT investment will rise as much as 9% annually. By 2020, Japan will close the current 10 to 1 investment gap with the US and get to a 5 to 1 ratio. Convenience store operators like Lawson, FamilyMart and Seven-Eleven Japan are working with the Ministry of Economy Trade and industry to boost productivity. Lawson is testing shopping baskets that allow shoppers to scan and total the cost, as they shop, eliminating the need interact with shop staff. Japan may be behind now, but their declining youth population is a strong driver to become a world leader in these areas.

Okay, this is episode number 6and we are talking about Middle Management Madness.

Soredewa ikimasho, so let's get going.

We all know that senior leaders must work through people and the key leverage group for them are Middle Managers. Times have changed though. Today, organisations have become much flatter, many management layers have been eliminated. So for all of us doing more, faster, better with less, screams out for delegation. Let’s put aside the issue of basic delegation nous on the part of the leaders for the moment as a separate issue. What about the capability of the delegatees to pick up the shield and spear? The successful cascading of responsibilities down the food chain, in a fast moving business world, is what will make or break organisations.

If you think about it Middle Managers are the corporate glue. They are the people to take the disparate market and system noise, then filter, sort, and nuance it. It then gets cleaned up and passed across to senior leaders to factor into their immediate and future strategic planning. These Middle Managers must also amplify the key direction and messages from the senior leadership group down to everyone below. Well, in theory this is the case.

How is this working out in practice in your company? Do you have good information flows going both up and down? Is everyone clear about what is going on and what is expected of them? Are the infamous departmental silos getting together to cooperate? Are they able to do this, because they all understand and have all bought into the senior leadership team’s vision and plans for the organization?

If it is not all sweetness and light, let me talk a little about why that may be the case. Knowing this information may help to work out how to fix the situation.

Middle Managers in Japan are tutored by their sempai– their seniors. The seniors themselves were similarly tutored by their sempai. Looking at the postwar period there are distinct periods of managerial mis-development.

The Imperial Japanese military officer corps returning from the war came back to a devastated economy and were placed in leadership positions in the rebuilt companies. The 1960s and 1970s saw Japan overtake the major European economies one by one. This was built off disciplined hard work and almost feudal sacrifice of family. For those in large companies, lifetime employment meant total 100 dedication was expected.

“Tough love” which had been the military model of producing troops willing to die unquestioningly for Emperor Hirohito was kept alive as a management notion. In the post war period of reconstruction of the country, tough love was being meted out by the same officer corps, now turned corporate managers. Leadership was top down, mainly barking out orders and berating subordinates.

The bursting of the bubble in the late 1980s left a corporate hangover with important side effects. Marketing and training budgets were slashed as companies struggled to survive. Thirty-somethings in the 1990s became the “lost leadership generation” because they didn’t get much leadership training. They had to work it out by themselves as they moved up the ranks and being promoted not because of their ability, but based on age and seniority.

Unfortunately, by the time the training faucet got turned on again inside companies, it went to their kohai or juniors. They might have become the sempaithemselves now but they had missed out. The content of their inherited tutor curriculum from their own sempai became all they had to go on and the tough love methodology became frozen in time.

The postwar system emphasised hard skills, but had little clue about how to develop civilians using soft skills. Today, in their fifties and sixties and in senior roles, many older leaders have not been challenged by a new management idea in twenty year to thirty years. Isn’t that a scary thought?

It gets worse when you consider older leaders having to deal with this internet savvy younger generation. By the way, the psychological and values gap between this older senior generation and the young millennials, now entering the workforce, is vast. Think measurable in light years, rather than calendar years – that is the gap we are talking about. Just go ask these young people how well they think the senior leaders in their company understand their generation. Brace yourself for the answer.

We live in interesting times. So lets keep going into what happened in the 2000s.

The Lehman Shock in 2008 left a renewed legacy of instability. Lifetime employment suffered collateral damage during the meltdown. The demise of Yamaichi Securities was a major shock in Japan. Don’t miss the events importance. This was a big turning point. It put the loyal and diligent Japanese employee on the street. They were the “I gave up my family for the company” types. This was a hammer blow to the traditional worker-company mutual benefit win-win compact.

In the immediate post-Lehman period, training and marketing budgets again took some intense blows. The upshot of all these things has been that sempai-led On The Job Training or OJT, has remained the central pillar of Middle Management education in Japan. Here is a key point to put all of this into context -OJT’s philosophical and practical roots stretch unbroken to the pre-1945 Imperial Officer Academies of tough love.

Think about this conundrum. This is a highly literate and well educated society, extremely sophisticated and advanced. So why is there is still no real domestic equivalent in Japan of the quality of the West’s major business schools, churning out the best and the brightest Middle Managers?

My previous company sent me to the Harvard Business School during a snowy and cold February, to attend a week long programme called Managing Professional Service Firms. It was a tremendous experience, but the real Japan insight for me came after the course finished. I was sitting on the plane on the long flight home thinking to myself, “Wow, Japan has nothing like this. Why is that?”. Waseda, Keio and Hitotsubashi Universities have tried to catch up and Hori san launched Globis University to try and bridge the gap. I think everyone would agree we still have some way to go though.

What has this meant for companies today?

We are left with multi generations of undereducated managers, doing their best, but still channeling their past-use-by-date unreconstructedsempai’sleadership techniques stretching back to the pre-war period.

They are all swirling around a tight whirlpool, out of context and out of touch with contemporary corporate needs. This is the critical reason why dated theories like the 70/20/10 model for learning and development are irrelevant here in Japan. These buzz words are greatly loved by the HR function in Japanhowever, both the 20% from the sempaiand the 10% component from training simply fail to deliver. Why is that?

In my experience, corporate training in Japan is almost 100% ineffective. Old style corporate Japan loves lecture and Japanese trainers just love to talk. There is plenty of one-way traffic around the “What” and “How” but little or nothing around the “Why”. The research tells us that we get five times more engagement by participants in the class, when we use the “discussion-decision” approach rather than lecture. “Distributed Intelligence” – using the full experience and smarts power of the group - is another powerful tool rarely utilized in Japan. What have you seen in your own company? What has been your experience so far? Are you confident that the people running the training programmes really know their stuff and know what they are doing?

If you were hoping for a post-training performance pick-up for your organization from traditional Japanese corporate training methods, then good luck! Daily, battalions of company trainees troop back to their desks and resume hostilities, without making any changes to how they do their job. What was the training for if they don’t use it? Einstein noted that we can define insanity as “continuing to do the same things in the same way, but expecting a different outcome”. We must all be mad to keep using such such outdated approaches and yet keep expecting major outcomes from the training!

Until OJT is re-configured together with better training delivery, which actually leads to behavior change, then there will be no progress. Think about it for a moment. If we can’t get behavior change, then how can we expect to get any progress?

Thanks to the way companies are traditionally run, Middle Managers will continue to squander their key role. They will fail to communicate in ways that trigger enthusiasm, inspiration, empowerment, and confidence. They won’t have much mastery of the soft skills. High levels of staff engagement will never be achieved. Critically, engagement is the magic spring from which flows innovation, commitment and motivation in teams. If you are not engaged and don’t care, why would you care enough to try to make things better? Innovation and engagement are directly linked. How are the engagement scores down at your shop? Okay, forget the survey scores. Look around. Are people really engaged or are they just there to get paid?

The isolated, male, greying Corporate Boardroom can continue to pontificate from on high about the company vision, but as we well know, actual workplace change is delivered by Middle Managers.

Are you confident that the succession planning construct has the right talent pool to draw on? What is your organization doing right now to deliver better Middle Management capability in Japan? Is this topic, even a topic yet, inside your firm? There is some food for thought. Let me know how you are doing with this issue.